A declaration of trust is a legal document that is very valuable if multiple people are buying a home together. The trust should set out the rights and responsibilities of each owner, making the agreement clear for all the people involved. A declaration of trust can protect homeowners, resolve disputes, prevent misunderstandings and make sure everyone is treated fairly.
Protecting Unequal Contributions
One of the main reasons a declaration of trust is valuable is that it can protect unequal contributions made when buying a property. People buying a home together can contribute different amounts – for example, one person may put forward a larger deposit while another person pays a larger amount of the mortgage payments. If you don’t have a declaration of trust, these unequal contributions may not be recognised when the property is sold or if the relationship between the owners breaks down
A declaration of trust will let you specify how much each person has contributed and how much they own. So when the property is sold, each owner will receive a fair share of the proceeds, based on how much they initially invested and how much they have contributed over the years.
A declaration of trust can also specify how future costs like mortgage payments, maintenance and repairs will be shared. If you need help setting up a declaration of trust, there are firms throughout the UK that can offer help and advice.
Giving Clarity in Complex Situations
Having a declaration of trust is also important for complex home-owning situations. For example, if a parent is helping their child buy a property, it can protect their investment as it will put in writing that the parent owns a certain percentage of the house. This will mean that they can get their money back if the property is sold.
Also, if someone is buying a property with a new partner but wants to make sure that their children from a previous relationship inherit their share, a declaration of trust can state who will get a share of the property.
